Interest rates moved appreciably higher at the tail end of the month of October.  After staying level or trending lower through most of the month, interest rates made a rather noticeable upside move during the last two business days of the month with increases in short, medium, and long term bond rates. 

Rates moved higher almost entirely based on the Federal Reserve statement released on Thursday.  In fact, for those who watch the bond markets you would have seen an increase in the ten year Treasury bond of ten basis points or 0.10% immediately following the statement release on Thursday afternoon.

The press release on October 28th had little new information in it with the exception of some minor difference in the Fed’s wording over future rate adjustments.  The Fed line that got the market’s attention was, “In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation.”  The focus for the market was the reference to the next meeting.  Market prognosticators had assumed the Fed would not raise rates until 2016 and this statement puts a rate increase in 2015 back on the table.

Our position originally called for the Fed increasing rates before year end.  In our view, the current statement actually puts this position into question.  Based on the Fed statement, they will consider a rate increase based on progress on employment and inflation.  It is highly unlikely inflation rates will change measurably in such a short period of time and while the economy is moving forward, the growth has slowed and it seems equally likely that there will be sufficient new data between now and the next Fed meeting in December to draw the conclusion that significant progress in the economy has taken place.  One out for the Fed is how they phrase economic progress as being either, realized or expected. 

The upward movement in rates that do materialize at week’s end has not moved all the way through the consumer market with the exception of mortgage rates.  Bank CD rates, money market rates, car loan rates, and credit card rate showed almost no change through the last week of the month.  Mortgage rates ticked up at the end of the week with average rate showing an increase of 1/8th to ¼ of a percent on the benchmark 30 year fixed rate mortgage.

Bank rates market recap for November 2, 2015:

CD interest rates:
Composite CD interest rate index 1.222 percent
3 month CD rates 0.436 percent
6 month CD rates 0.845 percent
1 year CD rates 1.234 percent
2 year CD rates 1.410 percent 
5 year CD rates 2.185 percent

Money market and savings account rates:
Bank money market rates and savings account rates 1.064 percent

Mortgage rates: 
30 year mortgage rates 3.817 percent
15 year mortgage rates 3.074 percent
20 year mortgage rates 3.609 percent
30 year jumbo mortgage rates 3.633 percent
30 year FHA mortgage rates 3.713 percent

Credit card rates:
Credit card rates for new credit card offers 13.88 percent

US Treasury rates:
Six month Treasury rate 0.23 percent
One year Treasury rate 0.34 percent
Two year Treasury rate 0.75 percent
Five year Treasury rate 1.52 percent
Ten year Treasury rate 2.16 percent

All bank savings rates and lending rates are based on surveys conducted by at the close of October 30, 2015 with all of the interest rates obtained directly from the banks within the survey.  Treasury rates are obtained directly from the Department of the Treasury.

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